Monthly highlights of major events which drive financial markets, along with perspectives on what they mean and why they matter.

February in review

Equity markets generally declined in February, with the exception of emerging markets, which advanced 0.50%. Canadian equities declined by 0.40%, influenced by potential U.S. tariffs that dampened consumer and business confidence and heightened economic uncertainty. Commodity prices also experienced significant volatility due to geopolitical tensions and trade uncertainties, with gold prices reaching a new record high before receding to $2,848.50/oz, and the price of natural gas jumping 24.98%. U.S. stocks fell 1.30% in U.S. dollar terms, with Consumer Discretionary (down 9.33%) and Communication Services (down 6.29%) sectors leading the decline. Bonds performed well, with the Canadian bonds up 1.10% and U.S. bonds up 2.20% as investors sought safety in the face of an increasingly uncertain economic landscape.

Here are some of February's most notable events: 

Businesses brace for tariff impact amid global trade tensions. The U.S. announced a 25% tariff on imports from Canada and Mexico, initially set to take effect on February 4. However, negotiations led to a 30-day delay, moving the implementation date to March 4. Subsequently, President Trump indicated a potential further delay to April 2, however, on February 27, President Trump confirmed the tariffs would proceed as planned on March 4.  In response, Canada announced reciprocal tariffs to mitigate economic impacts on Canadian workers and industries and protect Canadian interests. Simultaneously, China and the European Union signaled potential tariff countermeasures, further escalating global trade tensions. With tariffs in effect as of March 4, businesses continue to closely monitor the situation, looking for cues from the White House on further tariff developments and assessing the impact of tariffs on trade and economic activity.

Job growth highlights labor market resilience in Canada and U.S. Both Canada and the U.S. demonstrated notable labor market resilience amid economic uncertainty as reported in February. Canada’s economy added 76,000 jobs, supporting the reduction in the unemployment rate to 6.6%. This growth was broad-based, with significant gains in manufacturing and professional, scientific, and technical services. Similarly, the U.S. economy added 143,000 jobs, aiding in bringing the unemployment rate down to 4.0%. Notable gains occurred in healthcare, retail trade, government, and social assistance.

Index   Change (%)   Index Level
1 Mth YTD 1 Yr
Treasury Bill (FTSE Canada 60 Day T-Bill) 0.22 0.53 4.45 186.70
Canadian Bonds (FTSE Canada Universe Bond) 1.10 2.31 8.48 1,195.87
Canadian Equities (S&P/TSX Composite) -0.40 3.07 22.47 25,393.45
U.S. Bonds (Barclays U.S. Aggregated Bond, US$) 2.20 2.74 5.81 2,249.06
U.S. Equities (S&P 500, US$) -1.30 1.44 18.38 5,954.50
Global Equities (MSCI World, US$) -0.69 2.84 16.15 3,805.33
Emerging Marketings (MSCI Emerging Markets, US$) 0.50 2.31 10.59 1,097.25
Currencies   Change (%)   Exchange Rate
1 Mth YTD 1 Yr
C$/US ($) 0.55 -0.53 -6.11 0.6915
C$/Euro (€) 0.39 -0.76 -2.23 0.6664
C$/Pound (£)  -0.97 -1.08 -5.79 0.5496
C$/Yen (¥) -2.48 -4.76 -5.72 104.140
Commodities (US$)   Change (%)   Price
1 Mth YTD 1 Yr
Gold Spot ($/oz) 0.48 6.85 31.81 2,848.50
Oil WTI ($/barrel) -3.08 -1.55 -2.23 69.76
Natural Gas ($/MMBtu) 24.89 24.89  26.53 3.83

Total Return, as at February 28, 2025. Indices are quoted in their local currency.
Source: Bloomberg
Indices are not managed, and it is not possible to invest directly in an index.

Canada's inflation rises amid trade tensions and economic uncertainty. Canada’s annual inflation rate increased to 1.9% in January from 1.8% in December, primarily due to higher gasoline and natural gas prices. The Bank of Canada (BoC) maintained its 2% inflation target, with Governor Tiff Macklem emphasizing that discussions on adjusting this target are premature. The Canadian dollar weakened amid trade tensions, increasing the cost of U.S. imports. The BoC acknowledged that tariff uncertainties could dampen confidence but noted that looser financial conditions might support growth. Governor Macklem highlighted that potential U.S. tariffs could significantly impact business and household confidence, potentially reducing economic growth. Despite these challenges, the BoC remains committed to its 2% inflation target.

Did you know?

While much attention is given to international trade, domestic trade between provinces plays a crucial role in Canada’s economy, supporting business, job creation, and economic growth. Inter-provincial trade is vital to Canada’s economy, enabling the seamless exchange of goods and services across provinces and territories. To enhance internal trade, the Canadian Free Trade Agreement (CFTA) was established in 2017, aiming to reduce barriers and promote economic integration nationwide. This agreement is designed to create a more open and efficient domestic market, benefiting businesses and consumers alike. In the face of new tariffs and trade disruptions, the Federal government, in partnership with provinces and territories, has proposed a series of additional changes to the CFTA to further reduce internal trade barriers and encourage inter-provincial trade.